Outsourcing and FDI in Developing Countries: The Case of the Mexican Economy

Due to the favorable environment generated by the economic reforms of the nineties, the remarkable ascent of MNCs' FDI developed important industrial outsourcing during this period. Highlighting this trend are the investments carried out in the automobile industry and in export-based assembly plants in Mexico. This paper studies the trajectory of these industries, showing how the absence of an endogenous base as well as widespread international competition create the conditions for restarting the outsourcing process, but this time towards other countries. Also, it analyzes the scarce interaction between international financing, capital formation, export growth and economic performance.